Customers will listen, if utilities talk

But will utilities listen if customers talk?

And to what degree are they aware of the "smart grid"—whatever that means—and will they participate, if asked?

Surveys that purport to answer that question can be self-serving, of course, but they can also articulate or confirm perceptions with quantitative research. Today we offer you what appears to be an example of the latter, with value for utilities that do the outreach and engagement work, followed by service offerings of value to their customers.

Attention all customer service executives! Factoids on Aisle Three!

Here's part of the opening to the report by PwC, a consultancy, which articulates the situation we face today:

"Smart grid enables a transition to a more interactive, value-based relationship between the utility and its customers. The modernized grid will deliver an unprecedented amount of valuable data regarding a customer's power needs and preferences, for use by both the utility and the customer.

"It will also enable new rate structures, support new efficiency programs and facilitate the capture of opportunities relating to environmental trends.

"Customers will be able to view their power usage in detail, and adjust their behavior to use energy more efficiently and, ideally, reduce their energy costs.

"To fully capture the opportunities created by this shift, utilities must develop an entirely new type of customer relationship, one that puts the customer at the center of a utility's business strategy."

Well, those statements certainly neatly capture what power utilities are telling themselves and some are telling their customers. The point of the PwC survey was to find out what that mythical beast, "the customer," actually thinks about what the power industry thinks it has in store for them.

The following findings were gleaned from a survey of 900 Midwestern energy customers ages 18 to 64, i.e., those old enough to pay a utility bill. For the numbers I cite, I've combined "very important" and "somewhat important" to contrast with answers of "neutral" and "not at all important," which I've lumped together as well.

Fully 99 percent of customers want to save money! Amazing! But, that's where the slippage begins. Only 96 percent of customers find it important to identify areas where they can reduce usage. Eighty-eight percent find it important that the utility restores power more quickly after an outage. Eighty-one percent think it's important to understand how daily use impacts monthly bill. Sixty-four percent think it's important to choose from among multiple billing and energy usage plans offered by their utility. Sixty percent find it important to monitor the environmental footprint of their energy use. Forty-six percent rate it important to produce one's own power from renewable sources.

These numbers would appear promising for a utility offering any related services.

Customer segmentation by a traditional demographic factor such as age will also yield differences that can be addressed by different service offerings, the PwC survey found. Older customers are more open to learning how to reduce energy use. Monitoring one's environmental footprint is most important to younger and older customers, not so much those 45 to 54 years old.

Two interesting findings jumped out at me.

First, unprompted, focus group participants (a follow-on to the survey) said they were interested in generating their own power through renewables use. Second, customers would like to set an energy budget and have the power company send them alerts when they approach that self-imposed limit.

That second point means that a major avenue to value for customers wouldn't actually involve anything more than interval meters; just a back-end system that gauged each customer's energy use over a month's time and a timely alert so the customer could modify behavior.

But of course that's just one of several value propositions that customers are open to, so perhaps it's not as clear cut an indictment of the massive investments that utilities have made so far without denting customers' consciousness. Another focus group finding is that customers are open to a better "relationship" or "partnership" with their utility. Still, when asked about their utility providing additional services other than supplying electrons, some saw that as a convenience (bundling) while others did not trust their utility to do so.

Not surprisingly, most respondents didn't know much about "smart grid." Also unsurprisingly, when given a written description of "smart grid," customers had a more positive view, particularly around energy conservation and restoration of power after an outage.

Customers appeared to be hip to return-on-investment, with most (36 percent) seeking more than 20 percent savings in order to change their behavior. That's a pretty high hurdle to clear for utilities.

PwC took a crack at summing up its survey and focus group results into three strategies that don't break new ground, but remind us of how far most utilities have yet to go to employ even the most basic customer-centric policies:

Know your customers and earn their trust (apparently this has to be stated)

Offer them ways to manage their energy use and partner with them

Craft targeted messages to different customer segments and use various channels to communicate.

Heck, many parents have learned to text just to keep track of their teenagers' location. And we all know a few utilities that are doing all these things and more—actually offering rate options and added offerings. But for the most part, I'd have to say the industry—for all the smart meters and money spent—still have not developed a forward-looking business model and fought for the regulatory changes that would make those models succeed.

Finally, PwC makes a point that we've hammered ad nauseam in this space:

"Utilities must recognize that more nimble, customer-focused third party energy services companies are either on the ground competing for business or getting ready to do so. To prevail in this new competitive landscape, utilities must stop thinking of their customers as `ratepayers' and start listening to what these increasingly savvy customers are telling them about the services they want. They must also get over their fears of losing the control they have traditionally enjoyed in their customer relationships."

On this last point, a source recently pointed out to me that to offer dynamic pricing, utilities will have to outsource their customer relationship management to more innovative third parties and they are reluctant to do so for just the reason cited here: fear of losing the customer. On the other hand, if utilities cannot "get over the fear" and provide more compelling offerings, they will lose those customers anyway.

Comments

Customer Relationships

- May 2, 2012 - 9:32 AM

"a source recently pointed out to me that to offer dynamic pricing, utilities will have to outsource their customer relationship management to more innovative third parties and they are reluctant to do so for just the reason cited here: fear of losing the customer. On the other hand, if utilities cannot "get over the fear" and provide more compelling offerings, they will lose those customers anyway."

That's correct. And maybe it wouldnt be such a bad thing for utilities, their shareholders, and the folks who buy their product (customers, after all, are the folks who approve rates, terms and conditions of service, aka regulators).

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